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Shares of Tata Consultancy Services Ltd. they rose after the firm predicted an increase in corporate spending on technology, signaling that the IT industry slowdown may be coming to an end.
While earnings for the third quarter through December fell short of analysts’ estimates, the Mumbai-based company said 2025 looks better than the previous year. The stock jumped as much as 4.7% for its biggest intraday gain since July.
TCS leads India’s $250 billion software services sector that helps global clients such as Apple Inc. and Bank of America Corp. with business continuity as well as offerings in cloud computing, automation and artificial intelligence. The industry was going through stagnation due to high interest rates and military conflicts around the world.
The company expects this year to be better than last as customers are more confident about IT spending than in previous quarters and deal cycles are shortening, Chief Executive Officer K. Krithivasan said at a press conference in Mumbai. Because of these factors, he believes clients will be more focused on higher-margin software services in the future, he said. The company is bullish on sectors like banking and retail, he told Bloomberg TV.
JM Financial and Mirae Asset Securities were among the brokerages that raised their recommendations on TCS shares after the results.
Net profit rose 12% to 123.8 billion rupees ($1.4 billion) in the three months to December. Analysts had expected an average of 125.3 billion rupees, in a traditionally weak quarter for outside contractors. Sales rose 5.6% to 639.7 billion rupiah.
The new year brings new challenges for corporations, including TCS, as Donald Trump takes office as the new US president, potentially fueling a debate over H-1B work visas used by Indian IT companies to send engineers and developers to its biggest market. The US central bank, which cut rates last month, expects higher inflation and fewer rate cuts in 2025, factors that could weigh on customer sentiment.
TCS does not expect “any major disruption” to its business from potential changes in the US H-1B rules since the company’s reliance on that visa is very low, Krithivasan said.
